mikecart1 (97.85)

Today I'm 27. What Have I Learned?

41

Here are things I have realized that I hope can help those younger than me and older than me. This is the realist list I'll ever produce on here with my experience, my MBA, my investment experience, and my money experiences all before I turned 27 today:

1) My biggest mistake so far can be summed up in 2 simple words. No not "Motley Fool" lol. But instead the words "Financial Advisor". Having one taught me a few things I will never forget for as long as I live. First, no one cares about your money more than you do. Don't believe the hype. Don't believe some stranger that you pay monthly in commissions and fees for cares anything about you or your money. I started off with one of these several years ago and it lasted 18 months until I started to see things clearly. I wound up losing thousands from this mistake. But I always say Fail Fast Succeed Sooner. I feel sorry for the 40+ year olds that use these guys and get suckered in losing so much more money than I did.

2) If you are going to gamble, then gamble with money you don't need or don't plan on using for investment opportunities. Playing poker is not an investment. That is all I will have to say about that. ESPN loves to show the world all these guys with smiles on their faces and winning millions of dollars. These guys represent less than 1% of all poker players. They never show the other 99% that have lost thousands or more and some their entire savings on playing poker.

3) Invest early. This should be #1 but I thought of it as #3. Let me repeat this, INVEST EARLY. This is something I wish I had done when I first started working. I knew a lot about a few companies and a few sectors when I started working at 16. This was 11 years ago. I knew about GOOG when Webcrawler was one of the top search engines. I was around on the first iPod. I was around when companies like MCD were in a downfall. I could of bought GOOG at $100/share. My first summer I made about $3000. I could of turned that $3000 into a $18000 or more just on that one stock. This is just one example and clearly not the best. Luckily I started investing seriously in my 20's and have never regretted it since.

4) Don't take advice of the majority. More often than not, you would be better off following your own advice and your own instincts. Me investing in BAC when it was $3/share when Cramer and every other 'expert' was talking about nationalization was one of my best decisions the past 3 years. Wish I would of invested in SIRI at $0.05/share but that was a lot more risky and I could have done the same with GM and lost it all.

5) Don't listen to your parents if they are not millionaires by now. This is real. Also don't try to change their way of thinking. Doing so is like creating a new reality for them. For people that have been taught to work, make money, work more, make money will not understand the power of investing. They will never understand the idea of having their money work for them - something that is as beyond them as reading is to a dog.

6) If you want to work until you die, then don't bother investing. If you aren't putting 100% in investing, then you are most likely wasting your time. You are bound to get lazy. I love investing. It is something I always wanted to do. It feels natural to me. The entire idea of making money work for me is a lot more attractive than me working for money.

7) Look at macroeconomic trends. Look around in your neighborhood. Base stock decisions on things you know. You will come off a lot better in the long run. If xyz store is closing and you see it about to close in other places, then odds are is that its stock (if there is one) won't be doing so great in the near future. Obviously if it is downsizing, there are exceptions.

8) Pay attention to industries that reveal trends and upcoming designs and products. If I had invested in the 90's when Sony was 2 years away from releasing its first Playstation model, I'd have a lot more money. I had the magazines. I had the tips. I was a gamer afterall. I knew about Playstation 2 years before it was released. Sony's stock SNE went from the teens in the early 90's, to $30+ after the release in 1995, and then went up to $130/share by 2000. At this point SNE was creating both consoles, peripherals, and new systems like PS2.

9) Don't get emotional on stocks. If a stock you really think is going to do great but just isn't, and most likely won't, don't keep it and keep averaging down. Find out why it is dropping. Find out what its future is like. It is better to take a small loss than to lose everything.

10) Dividends. 1 word, and one of my favorite. The power of math, reinvesting, and solid dividend stocks 6%+ will snowball at some point and you will see that math+time = lots and lots of money.

Good arguements and philoshopy toward investments. I'm older than you, but I lost a lot through life's investments not in stock yet. However, I just able to get back to my feet and start learning.

Everyone could realize these stuffs. However, put them in to enforcement is little difficult. I think every investor needs to find their own sense philosophy/system and carry out that system good if that system works then master it. However, if a system keep loosing, it's considered stubborned right?

Well, Happy 27th birthday to you, and wish you will be more successful toward your investments and enjoy the meaningful life and help others to get to their reality dreams.

#1) Yeah I think point 1 is the most powerful and sadly may not be followed as much mostly due to people not willing to learn about the market themselves and have no issue handing the 'keys to their finances' over to some stranger.

#2) It's never too late. I know people say you need to invest early or you are doomed. But I say, look at the past 2 years. You had many gems that could have changed your life completely if you were in. SIRI, AAPL, F, C, BAC, etc. were all there. They were in the news daily. They were there for the taking. Investing is a marathon, not a sprint. And many people underestimate the power of math.

5) Don't listen to your parents if they are not millionaires by now. This is real. Also don't try to change their way of thinking. Doing so is like creating a new reality for them. For people that have been taught to work, make money, work more, make money will not understand the power of investing. They will never understand the idea of having their money work for them - something that is as beyond them as reading is to a dog.

As my own blogs reveal, I believe strongly in #1. Directly and indirectly, your point 1 consumes about 70% of my waking hours.

That said, I was wondering how you balance your love for dividends (point 10) with keeping an eye out for growth (point 8). I was previously ready to commit to a blue chips for the next couple of decades, but in the last 3 months it's the non-dividend payers that have been moving the gauge for me in terms of return.

If I locked in my current portfolio at a 6% compounding return for 20 years (at which time I would be a spry 41 years old):

$49,000 x (1.06)^20 = $157,149.64

Which doesn't strike me as particularly incredible... I guess my question is, prioritize growth and only go for blue chips if the market seems too "full?"

Good post.... Ba contrarian,swim against the tide,look In out of favor sectors being shunned by the masses for good value. Always look at the management of any company that catches your eye,especially If their are changes that could effect the stock In a positive or negative way. There are hundreds of good companies with BAD MANAGEMENT.... just some of the things I look for personally.... :) TS

#6) Thanks and yes. It took me awhile to accept this but supposedly I was supposed to lose a ton of money investing in the stock market years ago. Instead I have multiplied my wealth considerably and definitely outperformed anything my ex-Financial Advisor had me going towards.

#7) I set aside a good portion of money like my Roth IRA for strictly high dividend companies. MO is actually my favorite right now. I have done a lot of calculations and 6-10% dividends as a minimum in returns is pretty good. I play the spec plays with a decent amount of money but nothing that will have me lose sleep. I am not saying to go get blue chips. I'm not saying to not to either. You won't see me invest seriously in stocks that give under 5% dividends like a MCD or JNJ. I think people can do a lot better than that. Although those companies are very good.

Also I think you are missing some numbers there in your $49K calculation. You will hopefully be bringing money in to add to that and that only makes the snow ball bigger. I am always adding money to my investments and that makes my net worth grow that much faster.

Overall, I say always be prepared with money on the sidelines. It sucks to have a day where the market takes a big hit or a week of big hits or even a month and then not be able to enter the game when you want. You don't have to have every dollar invested. It is always nice to have a solid bench (cash) just like in sports.

Hindsight it 20/20. There are a lot of promising companies with a lot of great ideas that fail (90% of business fail within the first 10 years - once of the first things you learn in business school). It's nice when you hear a story about how someone got in early with a Microsoft, or a Dell, or a Google, but there are many you don't hear about who end up buying a dud. You could've also known that Microsoft was going to release the XBOX 2 years before it did, bought MSFT @ $57, and watch it never come back.

Also, most people don't have time to stock-pick on their own, or don't have the resources to do so. It's nice and all to pick out your winners and say "look at me, investing has made me richer", but beating the market is a zero-sum game. Juggling a full-time job, a family, and whatever else is hard enough. You may just not have enough time to do the due-diligence.

I'm not saying what you're saying is wrong. Just that, for most people, their best option is to work hard and smart at their job, live within their means, and save for the future (unfortunately for them, investing in an index-fund, which beats 75% of pros btw, hasn't been fairing so well in the past decade).

Regarding poker, I'm not a pro or anything but I have made a little money from it, and I don't think it should be treated as a form of gambling. The reason some people make it as professionals is due to of a combination of skill and hard work - just like pro athletes. That's why the best online poker pros are college dropouts in their early 20's - these are the only people that have enough time to study the game 24/7 and become the best at it.

To be a pro you would need to literally play millions of hands (to cancel out all the short-term variance), and you also need to spend about 5-6 hours a day playing, and another couple of hours every day studying the game and reviewing your hands. It's certainly not for everyone, but it can be done.

I liked all your other points though. And in terms of macroeconomic trends, don't just look in your neighborhood. Look in the newspaper. Think globally. Just because you live in the United States, that doesn't mean you have to invest in US equities.

I'm going to do something somewhat bold and disagree with you about #5.

They're all great rules and agree with them all, except that I'd like to think I'd be the exception to rule number 5. It's unlikely that I will reach millionaire status by the time my kids are looking to invest. I was far too late in the game when I finally started learning, but I think I'll be a good source of information for them.

My main advice to them is going to be to not make the same mistakes that I made, which was largely not knowing about (or avoiding) rules like yours.

Also, happy birthday! I'll have a drink or two in your honour tonight, although in all honesty, I'd likely do that anyway regardless of it being your birthday.

#17 I agree. Poker isn't gambling. It's a game of skill. Most of the money (asides from the rake the poker room is getting) being made is from the people who understand this and take money off the fish gambling.

Happy Birthday! I'm not a fortune teller, but I believe you are going to become a very wealthy man. My own experience has led me to many of the same conclusions as you. I'm a little older than you, so I have less time, but maybe we can meet for a drink at the country club in fifteen years!

#14) I have the time. I spend most of my days at work like anyone else. Anyone saying they are in their cubicle doing 40 hrs of work straight every week is a complete liar and only making themselves look bad. I never spent 40 hrs doing anything in my life hw, studying, or work related. Instead of playing with Facebook or browsing a bunch of useless things, I decided long ago to use that extra time as time in researching stocks and making money on the side. I think that was the right decision haha.

#15) Many people do. I decided to take the road less traveled. Hopefully that road has a lot more money on it haha.

#16) Thanks

#17) I stopped at $10/20 NL. I couldn't take the swings anymore. I found it to be a lot less fun after the poker boom from Moneymaker. Sites like Cardrunners turned fish into sharks. I only play on vacation at life casinos. Maybe I will return one day to lower stakes but I think I have wasted enough of my life sitting at poker tables or staring at a bunch of virtual ones on my monitor haha.

#18) Fair enough.

#19) Agree

#20) I did that at 17. It is time to for me to grow up haha although I'm still looking for girls too.

#21) He is a small % of players and not the type of life I want to live anymore (grinding and playing daily)

#22) I hope I can. Then I can buy Motley Fool and have them publish an article I do for once. I ask them everytime but never get accepted haha.

#23) I read a lot so maybe. I just finished Rich Dad, Poor Dad. I read a lot of life improvement books. :D

#25) Yeah we are the few young investors that have investing as our favorite hobby/interest.

#26) No I haven't trusted my parents when it came to finances long before I read that book. The book mostly repeated things I have learned over the years through other references and my own experiences. I don't believe in buying a home for example because I don't believe a person ever owns a home. The home owns them. It keeps them from being mobile. It keeps them in situations where they might not want to be for any long period of time. People will counter that with saying a home is an investment. Well I say I can do better, keep the mobility, and not have a large % of my money tied up into something I was never really interested in to begin with. I might be the minority here on this topic though.

My ex-financial advisor asked what my goals were several years ago. I said I wanted a million before I'm 30. He looked at me and asked "why, what you want to buy?" I said, "who ever said anything about buying? I just want it" This is something he never understood and by his pace with my money, it is something I would never get to unless when your assets hit $0, there is a roll back to a million lol.

I look at money as a goal like in the movie Up In the Air with George Clooney. He tells the lady I want the miles. She asks something about if he wants to travel the world. He says he doesn't and that the point of the miles is the miles itself. That kind of explains where I'm coming from. :)

I agree with those who say poker largely requires skill. In my eyes, the 1% you mention are the ones who can calculate odds instantly and have played through countless hands. Other than reading tells, if you do the mathematically correct thing every time, I believe you will win in the long haul.

I don't wholeheartedly agree with all of your points (especially about JNJ), but I believe you're well on your way towards creating wealth over the long haul and I love seeing fellow young people doing things the right way.